Industry bodies want corporate tax rate reduced

Other business hotspots like Singapore, Macau and Hong Kong have corporate tax rates at 17%, 12% and 16.50% respectively.

New Delhi: With some of the major global economies revising their corporate tax rates in order to boost business in their countries, there is a growing demand from corporate and industry bodies in India to decrease the basic corporate tax rate in India to bring in more confidence among the corporates in the country.

The long-standing demand from corporate and industry bodies has been to lower the corporate tax rate in India from the existing 35% to a flat 25%. This, they feel, would also boost foreign investments in India as well as increase tax collections for the government.

The United States has recently decreased its corporate tax rate from the existing 35% to 21%, making the United States more competitive in attracting foreign investments. China has kept its corporate tax rate at 25%, while the European Union has a corporate tax rate of 21.30%.

Other business hotspots like Singapore, Macau and Hong Kong have corporate tax rates at 17%, 12% and 16.50% respectively.

Also, the average worldwide corporate tax rate has been showing a decreasing trend since the last 10 years, and now stands at 21%. The trend for lower corporate tax rate in the world had been adopted to increase foreign investors and help in the growth of the economy.

The Confederation of Indian Industry (CII) and FCCI (The Federation of Indian Chambers of Commerce and Industry) have also sent their recommendation to the Ministry of Finance ahead of the Budget session next month, to decrease corporate tax rate in India to 25% to boost investments and confidence in the corporate sector in India.

In a letter to the Ministry of Finance, the CII has requested the Ministry to reduce the corporate tax rate in India to 25% “unconditionally without any turnover criteria, which should further be brought down to 18% in a phased manner”.

FCCI has also recommended the government to reduce the corporate tax rate across the board to 25% to boost economic growth and increase overall tax collection.

A spokesperson from FCCI told this correspondent: “It is very important for India to reassess its corporate tax rate to maintain its competitiveness in the global market. Higher tax rate in the corporate structure makes the country unattractive for foreign investors at a time when the global average of corporate tax rate is on the decline. The lower tax rate also means greater collection of taxes by the government.”

A CII spokesperson told this newspaper. “The CII has also sent its recommendation to the government to reduce its tax structure. The corporate tax rates, compared to other global companies, are quite high in India. We need to bring it down to remain an attractive investing destination. We have been demanding that the corporate tax be reduced to 25% wholly and further be reduced to 18% in a phased manner in the coming years.”